Fiscal Cliff Be Damned -- 5 Reasons Why 2013 Looks Pretty Good

Raj Sabhlok
, ContributorI cover the innovative technologies coming out of Silicon Valley.Opinions expressed by Forbes Contributors are their own.

Despite the fiscal cliff looming, I still find myself optimistic about the coming economic year. However, my optimism for the economy is not dependent on whether it will or will not be resolved in time (though I predict it will by year-end or shortly thereafter).

I’ve been watching several economic indicators that have recently turned positive, led by a respectable third quarter GDP of 3.1 percent. And, not to discount the considerable global risk from Europe and an underachieving China, there are plenty of reasons I believe the world’s largest economy will carry the day in 2013. Here are five reasons why.

#1: Corporate austerity may be over

Ever since the bottom fell out of the global economy in 2008, most businesses have been hoarding cash like they were preparing for Armageddon. American companies are sitting on a whopping $3 trillion in cash. Costs have been wrung out and productivity has been optimized with the current headcount and capital. It is now time for U.S. businesses to invest in growth.

Expect to see businesses start to hire in earnest as well as make capital and technology investments, particularly in the second half of the year as the uncertainty of the fiscal cliff should become clear.

#2: Unemployment begins to ease

Despite the economic shock of hurricane Sandy, the latest unemployment figures have finally dipped below eight percent. This just may be an early confirmation of businesses’ hiring posture going into 2013. These figures could be the best prognostication for growth on the horizon, as more people employed will lead to higher demand for goods and services.

In fact, recent data shows that family and individual savings are beginning to ease, which means that people are feeling more inclined to spend. For now, many economists believe that unemployment will stay below eight percent and will likely exit 2013 even lower.

#3: Housing numbers are up

Another pleasant surprise of 2012 has been the apparent rebound in residential real estate transactions and prices. Home prices have firmed and even increased as distressed sales and opportunistic buying made up less of overall transactions.

As homeowners’ wealth increases, it’s more likely they will add to the growing economy. Plus, a healthy real estate market may also revive a badly decimated construction jobs market — some 2.2 million construction jobs were lost since the housing bust.

#4: Lower energy prices could stimulate manufacturing

U.S. oil production has increased steadily since 2008 and global demand is now waning, pushing oil prices down — and likely to stay down in the near year. Lower energy prices mean that the manufacturing sector is poised for growth; it will be better positioned to compete with the likes of China with lower production and shipping costs related to lower energy costs, along with a weaker dollar. The positive energy dynamics should accelerate the U.S. GDP in 2013.

#5: Wealth factor

The major market indexes should end the year well into positive territory. Some have argued that there is an inverse relationship between a rising stock market and consumer confidence. That may be the case during a market run-up, but there is no denying that consumers become wealthier in a buoyant market — and they tend to make big purchases. In our business, we’ve seen corporations be looser with spending in the midst of stock runs.

Maybe it’s because it has been such a long road to hoe for the U.S. economy that we want to grab any glimmer of hope of a recovery. Sure, there are enough scary things out there to say that the economy will get worse before it gets better, but I think this glimmer might actually be a spark.

Call me an optimist or just someone who likes to root for the underdog, but I think the “cliff” may really be a launching pad.